Exam 5: Extreme Markets I: Perfect Competition

The long run supply curve to a market depends on the characteristics of the firms that currently operate in it.Thus, the latter will be more elastic than the short-run supply curve.

In the figure given below, D₁ and D₂ represent the demand curves for land before and after the ethanol program respectively.SRS is the short-run supply curve of land. -Refer to Figure .What will be the shape of the long-run supply curve of land suitable for corn farming?

Assume that the government of a nation rations the crude oil available to car owners each month which reduces the overall demand for petroleum.However, the nation continues to import oil from the world market.Which of the following will be observed in the oil market?

If the long-run market supply curve is perfectly elastic, a decrease in variable cost will:

The breakeven price of a perfectly competitive firm is obtained at the point of intersection between the marginal revenue and marginal cost curves.

How is the short run response to a change in demand or cost condition different from the long run response in a perfectly competitive market?

Assume that recent oil exploration coupled with a fall in demand reduced petroleum imports of a nation to zero.We can expect:

Discuss the conditions that define perfect competition.

Assume that the world price of Good A is $8 per unit while its domestic price is $6, and the marginal cost incurred by domestic producers for producing one unit of Good A is $5.If the government imposes a tax of $3 per unit on domestic producers, which of the following situations will be observed?

In the figure given below MC denotes the marginal cost and AC denotes the average cost of a firm under perfect competition. -Refer to Figure .What will be the long-run impact of the increase in demand (from Q₀ to Q₁) on the price level in this industry?

Suppose beer producers in Munich became aware of the low price of one barrel of beer in the domestic market relative to that in the United States.What will be the impact of this price difference?

In the figure given below MC denotes the marginal cost and AC denotes the average cost of a firm under perfect competition. -Refer to Figure .Which of the following points represents the long-run equilibrium price-output combination?

Given below is a perfectly competitive firm under long run equilibrium.AC and MC represent the average cost and the marginal cost incurred by the firm.P₀ is the equilibrium price level while Q₀ is the equilibrium output. -Refer to Figure .What impact will the increase in raw material cost have on the long-run equilibrium price level?

Which of the following products witnessed a high growth in the number of producers within a few years of market introduction, but was followed by a fast and substantial shakeout?

In a perfectly competitive market, firms are not restricted from entering or leaving an industry in response to profits or losses.

Assume that there are two types of perfectly competitive firms whose cost of production differ.An increase in input prices will lead to an exodus of high cost firms before low cost ones.

State some of the policies adopted by the U.S.government to check petroleum prices.

The short-run supply curve of a perfectly competitive industry with firms having identical costs is:

If the cost of production incurred by two producers in a competitive industry differs, the long-run supply curve:

Assume that the world price of Commodity X is $9 per unit while its domestic price is $8, and the marginal cost of production is $6 per unit.If the government imposes a price ceiling of $7 on domestic output: